Construction in Russia is always a risky business. Although... What business in our God-saved country is not risky? But construction always means a lot of money and long deadlines for completing projects, which often turn the heads of representatives of the third oldest profession, yes, developers. In 2021, there are more than 1,000 bankrupt developers in Russia, and the buyers of their square meters have not received their standard mansions on time. So, if you don’t want the fleeting glory of lonely picketers at City Hall with a sign saying “Give me my money back - I have nowhere to live,” you’ll have to devote a lot of hours to checking out the developer.
However, we will brighten up this difficult path for you as a real modern Jedi, sorry, real estate buyer, and go through this exciting quest together. We'll tell you where you can collect the necessary chips, how to save in this game and how to beat it with minimal losses to life and health.
What to look for when wanting to check the developer’s documents
Before deciding to choose a developer, pay attention to the pace of construction; of course, investing in completed projects is safer, but you should not give up other options. The dynamics of construction work should be stable; modern companies broadcast construction projects on the Internet and publish photos. But this does not exclude delays, since the developer often faces the problem of changing the contractor and reorganizing the process. If you see a slowdown, contact the company with which the contract is concluded.
Be sure to look at who the construction partner is; it will be great if they are reputable companies, investment funds that are not used to rushing when making a decision on cooperation. State banks are also a sign that the developer is reliable.
You should be wary of low prices per square meter; an adequate pricing policy is a sign that the company is not involved in fraud. It is also worth studying information about the developer in the media, checking forums or social networks with reviews, contacting competitors so that they can talk about the company with which you are going to cooperate.
It is better to go to the construction site on a weekday to assess whether you are comfortable with traffic jams on the road. Look at how things are going with the construction of the structure, talk to the builders, if their wages are delayed - this is already a cause for concern, your apartment may be delayed in the same way.
Dmitry Trataevsky Project lawyer
It is worth noting one more way to check the reliability of the developer with whom it is planned to conclude an agreement on shared construction. This method involves obtaining data on how long the developer has been on the construction market. The more years it has been operating, the more likely it is that the developer is not going to leave this market in an unscrupulous manner. To obtain this information, you must visit the official website of the Federal Tax Service of Russia - www.nalog.ru. On this site, in accordance with paragraph 1 of Article 7 of the Federal Law of August 8, 2001 No. 129-FZ “On State Registration of Legal Entities and Individual Entrepreneurs”, there is a service using which you can freely obtain information contained in the Unified State Register of Legal Entities/Unified State Register of Entrepreneurs a specific legal entity/individual entrepreneur in the form of an electronic document.
And here he is, our winner!
If your developer has overcome the first stages of casting, please accept our congratulations, this is not so bad. But another stage of selection awaits him, where he can stumble at every point. There is a standard set of actions that every real estate buyer can and should perform if he does not need the headache of obtaining his legal and paid square meters. Read and remember:
Analyzing the company's track record
. And we are not interested in standard phrases on its website like “We have thousands of successful projects and millions of satisfied clients behind us.” As practice shows, such an ideal reputation for a company can easily be achieved by hiring an entire department of marketers and copywriters - and they, as you know, will sell anything. We believe only in facts and figures. Be sure to check the developer’s registration details so as not to run into a company that re-registers with enviable consistency every six months, conquering more and more offshore companies. Evaluate the structure of the company - it’s always safer to cooperate with the head branch of the company than with their subsidiaries, which are closed in batches (even the poem came together).
We monitor delays.
Of course, you can give a chance even to those developers who deliver each of their properties a couple of years late, but if money is as dear to you as a memory, you shouldn’t do this. And even more so if you buy an apartment in a building under construction - if you think that the developer, who constantly delays the delivery of his projects, will correct this very house, the apartment in which you bought, life will cynically disappoint you.
We calculate how old the company is.
It is indecent to ask women about their age. And if you give a developer several hard-earned millions, you simply must know his entire pedigree. Developers are like wine - they only get better with age. The oldest Russian companies usually exceed the age of majority - they are from 20 to 25 years old. True, if a company has been building since Soviet times, you can expect the use of old technologies, low quality and poor service. But there is a lot of information and feedback - there is something to work on. Be sure to check out the portfolio. After all, if a company is already 10 years old, and in its arsenal there is only one building with 100 apartments - it’s suspicious, isn’t it?
We check the availability of a building permit.
Here, here is the treasured apartment in New Moscow, for which you wouldn’t mind giving up a kidney! Well, or take out a mortgage. And now you’re already wondering if red wallpaper in the bedroom goes well with green curtains? But stop: first ask the developer to show you the building permit. After all, this also happens: a developer begins to build a house in the hope of a positive decision from the regulatory authorities - but for some reason it does not happen. Well, the planets have not aligned, or there will be a new metro station here. But the house is already half built and even the apartments in it have been sold! It is to such shareholders that the same fame comes - when they are shown on Channel One news as victims of economic crimes. So-so fame, I must say.
We carefully read the contract.
A decent developer offers to familiarize yourself with it on its website - its content is standard and does not represent any secret. But if a construction company is foaming at the mouth and proves that all the data in the contract is confidential and needs to be signed right here and now, because apartments are being snapped up like hot cakes and tomorrow it will be a million more expensive at once - leave in English. Nothing good awaits you here.
Before signing, take the contract with you and consult with a lawyer. He will quickly find the same notorious text in small print, which costs the buyer significant amounts of money. For example, an apartment may suddenly increase by several square meters, and they will have to be paid for. Inaccuracies also arise in the matter of finishing the apartment - florid formulations about “walls prepared for rough finishing” may in fact mean panel slums with rock paintings.
We are looking for data about other objects.
Buying real estate is a matter of both looking and feeling. After all, as a famous fairy-tale character said: “Otherwise there can be an optical illusion!” So, if on the developer’s website you don’t see information about the completed objects or you only find vague wording like “Millions trust us,” put a cross on it. Real developers post entire picture galleries of their properties on their websites with detailed descriptions of layouts, areas, addresses, and prices. By the way, if there is no price list on the website, but they lure you with a beautiful “Call us, we will make you a profitable offer” - run, this offer will only be profitable for the developer.
We check if they are lying to us.
Yes, yes, everyone lies, this is a well-known fact. But it’s bad manners to withhold important information from buyers. Imagine - you have your eye on a penthouse not far from Mitino. A residential area, 20 minutes from the center of Moscow, next to a grove and a park with sports equipment, excellent infrastructure and lovely neighbors all around. It would seem, give your hard-earned money and live in this paradise! No matter how it is: the windows overlook the colony, there is a railway line behind the house, which shakes the dishes in the closet, and in a year a new metro station will be built here. And not a single word about this on the site! Coincidence? Don't think…
We study reviews on the Internet.
Of course, they can also be custom-made, so we pay attention to the details: the authors of fake reviews don’t bother with detailed descriptions, but real owners of problem apartments can tell up to the minute when the tiles in the bathroom began to peel off and how quickly mold grows on the walls that freeze in winter .
What developer documents need to be checked?
A reliable developer is not a dark horse that your friends recommended to you. It must have its own website, where all the documentation, the whole package, including licenses, declarations, decisions on the allocation of land, are freely available. All this should be available to potential clients. In addition, the most reliable way is to conclude a shared construction agreement. This document is registered by a government agency and eliminates double sales.
However, a regular contract, drawn up legally and without pitfalls, is also suitable. However, in any case, in accordance with the Federal Law, the agreement is concluded in writing, is subject to state registration and is considered concluded from the moment of such registration). It is best to study this document with a competent specialist; if the organization treats its responsibilities in good faith and has nothing to hide, the contract will be provided to you for your home review. The deadlines for delivery and penalties should be indicated here if one of the parties violates the conditions.
Don't ignore the building permit - it is checked by a specialized service and provided by the company at the request of a potential client.
How to make your demands known
You can take one of two paths: demand a refund of the money, while refusing the equity participation agreement (DDU), or demand an apartment (non-residential premises).
In order for your claims to be included in the Register of Creditors' Claims, you need to put them in writing and send the application to the manager. The application must contain the following information: full name, address, telephone number, number and date of the equity participation agreement (DDU), as well as information about whether the apartment has been partially or fully paid for. The application must be accompanied by a copy of the DDU (or other document on the basis of which you purchased housing), copies of payment orders or cash receipts orders confirming your payment under the contract, and a copy of your passport (pages with full name and registration).
It is better to send the application by a valuable letter with a description of the attachment; you can track the status of the letter on the Russian Post website using the track number. Even if you send the letter on the last day of the three-month period in which you can submit claims to the developer, it will be submitted on time.
Next, the manager will decide whether your demands are justified - the law allows 30 working days for this. Information about the manager’s decisions is published in the Unified Federal Register of Bankruptcy Information. If you are refused and not included in the Register of Creditors' Claims, you can appeal the refusal within 15 working days to the arbitration court.
How to check the developer when buying an apartment?
Before buying an apartment, study several important factors:
- Reputation of the construction company;
- Connecting communications to a residential building;
- Adequacy of housing prices;
- The company must have a large number of orders;
- Documentation is in order;
- The developer has nothing to hide, he provides all the contracts;
- The company was not involved in litigation.
Dmitry Trataevsky Project lawyer
In practice, there are many cases when a developer continues to enter into agreements for shared participation in construction, while claims are filed against him, which in the near future will negatively affect his financial condition. Not to mention claims to declare the developer bankrupt. For a participant in equity participation in construction or a future participant, to obtain information about the presence of current litigation in which the developer is a defendant (it is this procedural status that should be of interest to future shareholders), it is enough to visit the official website of the Federal Arbitration Courts of the Russian Federation - https://www. arbitr.ru
Where does the money go, to which cities?
Before you give the developer your honestly earned hard-earned money, analyze whether he has financial problems. And now we are not talking about temporary phenomena such as a crisis during quarantine or an economic recession - we are talking about the systematic flow of funds anywhere, but not for the construction of houses. Do not contact developers under any circumstances if they have the following in their hearts:
- bankruptcy cases - you can check them in the File of Arbitration Cases online. This shows debts to contractors that developers do not pay even by court decision. The offended counterparty will definitely receive his money, but after transferring the company to an arbitration manager, who will sell the developer’s property under a hammer. As a result, the house will be transferred to another company for completion - and here its fate is lost in the foggy realities of Russian construction. It can take 5 or 10 years for a problem house to be completed.
- tax debts - you can also find out about this on the Internet, just go to the website of the Federal Tax Service. Good tax officials post information about all companies that owe the state more than 1,000 rubles in legal fees. Tired of constant shortfalls, the tax office may well initiate criminal prosecution of the head of the company or begin bankruptcy proceedings. Neither option is suitable for you if you are already planning to live happily ever after in your apartment.
- debts from lawsuits - the website of the Federal Bailiff Service will gladly inform us about this. Here you can find any writ of execution submitted to the bailiffs for enforcement. Of course, the reason for the litigation is also important. But if a company has million-dollar debts to third parties, which it, ignoring court decisions, does not pay for months, it makes you think, doesn’t it?
Is it possible to check the developer when buying an apartment with a mortgage?
What documents must the developer provide if you want to get a mortgage? All the same, in addition, consider which bank the company cooperates with, whether it is possible to obtain a loan with support. Sometimes it happens that the company itself offers favorable conditions for concluding an agreement with a partner bank.
A mortgage is not a reason to refuse to familiarize yourself with a set of documents, so your actions should be the same as if the purchase was not made on credit.
Meeting of creditors
The manager periodically gathers creditors to report to them about the financial condition of the bankrupt developer, the claims of creditors and the distribution of funds received from the sale of the developer's property.
It is better for shareholders to attend the meeting of creditors to monitor the situation and receive first-hand information. If you cannot participate in person, you can view the information on the results of the meeting in the Unified Federal Register of Bankruptcy Information. Not only the dates and agendas of future meetings are published there, but also the manager’s reports from past meetings, information about the bankrupt’s property and relevant judicial acts.
Trusted developers in Moscow
In Moscow, the reliability of the developer can be checked online at the city services service. There are 163 developers gathered here; you can enter into an agreement with them without fear that the housing will not live up to expectations.
By the way, this useful service will also tell you about those companies that are going through bankruptcy proceedings, breaking the law or having a bad reputation.
There are many ways to check the reliability of a developer. You need to study the details, approach the process competently, pay attention not to the conversations of your acquaintances, but to the things that you see yourself.
History and structure of the company
This means not only studying the number and types of completed objects, but also checking the developer’s registration data.
Often companies are re-registered with the tax authorities, for various reasons - from banal organizational ones to the opening of a new legal entity due to serious problems of the previous one.
In addition, it is worth paying attention to the personalities of the founders: today there are many development organizations on the market with a seemingly clean reputation, but which are “reincarnations” of problematic companies.
The situation is approximately the same with the internal structure of development companies, which are often complex concerns. If the parent company is engaged in the construction of a specific object, the developer looks more reliable, while subsidiaries, even acting under the brand name of the main one, can change, “get lost,” etc., delivering not very high-quality objects.
In such cases, it makes sense to search and verify information about both the parent company and the subsidiary.
We especially note the need to verify information about conflicts related to the activities of the developer. It's no secret that many construction companies were subject to serious complaints from buyers - even to the point of holding pickets, going to court, law enforcement agencies, contractors, and the authorities themselves - even to the point of initiating criminal cases against officials of the developers.
Checking registries
First of all, you need to find court orders and check the status of other properties of the developer.
Unified register of developers
The resource has existed since 2021 and is something of a rating platform for developers (and with state control).
We enter the developer you are interested in into a search engine and look at its rating (from 0.5 to 5 points). This figure is based on an analysis of the deadlines for the delivery of objects. It’s optimal if you have an “excellent student” in front of you - most likely, the house will be delivered on time. If the number is lower, think - do you need to take risks?
Construction supervision
Yes, yes, such sites also exist. What can you watch here? Black and white lists of developers. What are they based on? Also on the timing of delivery of objects (and partly on their quality).
If your developer is blacklisted, look for another candidate. You can find these lists (for Moscow):
- on the official website of the “Ministry of Construction Complex of the Moscow Region”;
- on the Moskomstroyinvest website.
If you live in another region, look for the supervisory construction authorities of your city.
Court archives
There will be two “vectors” of verification – from legal entities (creditors or business partners) and individuals (shareholders). Required:
- Find a file of arbitration courts. If the developer often acts as a defendant, this is a reason to be wary, most likely the company has financial problems.
- On the website of the district court (the registered address of an individual will help you find the right one) you can see the history of disputes with individuals. This is not an absolute indicator, but if the developer is often sued, this is another good reason to be wary.
Escrow accounts
Since July 1, a law has been in force according to which shareholders deposit funds under the DDU into escrow accounts, and not directly to the developer. This measure, it would seem, should minimize the risks of the shareholder - the developer gets access to the money only after construction is completed. If the developer delays the deadline or is declared bankrupt, shareholders can get their money back. At the same time, the law does not work well in the situation with mortgage lending.
Only the amount you deposited is blocked on the escrow account - the contract price, i.e. the cost of the future apartment. If you refuse to execute the DDU due to the bankruptcy of the developer, the funds blocked in the escrow account will be returned to you. And the bank will not return interest. Therefore, if you take out a mortgage, be prepared to incur interest losses in the event of bankruptcy of the developer.
You can try to recover interest paid on the mortgage from the developer by going to court, but the success of this campaign remains in question.
Wait for an apartment
Shareholders can organize a housing cooperative (housing cooperative) and complete the house themselves. The court may also transfer the responsibility for construction to another developer, who is selected by the local government authority that controls shared construction.
In the case of creating a housing cooperative, there are many difficulties and nuances, but shareholders control everything themselves. This is similar to creating an HOA.
A new developer means new terms for construction and transfer of apartments to shareholders. Also, shareholders will not be able to receive monetary compensation from this developer - only the premises that they bought under the contract. In this case, a new DDU can be concluded between the new developer or an additional agreement can be signed to the old one with new deadlines for obtaining premises.
